I don’t like it when public officials mislead their constituents. Of course, that happens all the time. From city hall to Washington, politicians often lie or distort the truth. Honesty in politics seems to be at an all-time low.
That’s true in the City of Jefferson as well. During the current election campaign, there’s been some back and forth about whether or not the city should have cut its property tax millage rate this year (it didn’t.)

Steve Quinn, who is challenging mayor Roy Plott, says the city needs to do a small tax cut, at least a symbolic cut. But Plott claims the city can’t afford to cut the tax rate because of an assessment error last year and the hiring of additional staff this year.
Poppycock.
What’s really happening is that Jefferson officials are gaming the system, playing with the numbers in an effort to make its budget look tighter than it really is to justify an inflated tax rate.
Here’s the rundown:(Note: This story is modified from the print version where charts of this data are published.)

1. The city knowingly under-budgets revenues.

In an effort to make its income look smaller than it really is, the city each year under-budgets its expected revenues by a huge amount.
In 2012, the city budgeted to take in $2.72 million in property taxes, but it actually took in $2.9 million. In total general fund revenue (which includes sales taxes, fees, etc.,) the city budgeted to take in $6.7 million, but really took in $7.3 million. So that year, the city under-budgeted its general fund revenues by $600,000.
Despite the fact that the town actually collected $2.9 million in property taxes in 2012, it only budgeted $2.7 million for 2013. Why? It knew its digest was growing and that it would take in more than it did the year before.
All down the line, the pattern is clear that the city is very purposefully understating revenues in its general fund budget by a significant amount, anywhere from $400,000 to $800,000 per year. They are doing that in part by saying the city will only collect 92 percent of its property taxes when in reality, it collects over 94 percent each year.
A little padding is one thing, but this is excessive padding done to mislead citizens into thinking city revenues are lower than they really are.

2. The city knowingly over-budgets expenses.

In addition to low-balling income, the city over-budgets expenses. In 2016, the city budgeted spending $7.5 million, but only spent $7 million. All the way back to 2012, the city annually under-budgets its spending by $400,000 to $500,000. In some years, the city has budgeted so that it looks like the town will have to dip into reserves to make ends meet, but that hasn’t happened over the last five years.

3. The combination of under-budgeting income and over-budgeting expenses is giving the city a huge amount of excessive net income.

The city is able to pad its finances by $500,000 - $1 million per year by doing this kind of budgeting. This becomes clear when you look at the amount of “excess” revenue the city has taken in each year for the last five years.
Despite Plott’s comment that the city was hurt in 2016 by a bad assessment year, that’s clearly not true. The city took in $469,200 in excess revenue that year. And the year before, it took in nearly $900,000 in excessive revenues.

4. The city is attempting to hide its large pile of reserves through “assignments.”

There are two kinds of reserves — “assigned” and “unassigned.” The assigned reserves are supposed to be for items the city has a financial commitment to pay. The unassigned reserves are funds that can be used for anything.
A few years ago after this newspaper wrote about the city’s huge pile of cash reserves, the city started taking some of those funds out of unassigned and designating them to some “assigned” category. But the way the city did that really didn’t commit those funds to be spent and it was only a move to make the town’s reserves look smaller than they really are.
Starting in 2013, the city kept its unassigned reserve balance about the same despite the fact that its overall general fund reserves were growing. This is just game-playing by artificially making the town’s available reserves look smaller than it really is. (And these aren’t all of the city’s general government reserves. If you include all government funds of debt service and capital expenses, the total balance of reserves both assigned and unassigned is $10.7 million.) Many of the city’s so-called “assigned” funds really aren’t assigned,. This year, for example, the 2018 budget “assigns” $70,000 for new city gateway signs and another $100,000 for new playground equipment. But those expenses are not mandatory and are “assigned” only to make the town’s real reserves look smaller.

5. In addition to its general government funds, the city also has its water system fund which has huge reserves.

The water fund by itself has unrestricted reserves of $3.4 million. Last year, the water fund netted over $1 million in its operations of excessive revenues over expenses because of high city water and sewer rates. And that was before the city took in another $1.1 million in tap fees. In short, the city isn’t having to keep its millage rate high to subsidize its water and sewer fund; that fund is also rolling in cash and excessive revenues.

The entire point of Jefferson luring in industry and commercial projects was to grow the tax digest and take the burden off of residential property taxes. Jefferson has been successful at growing its industrial and commercial tax base to over 60 percent of its total digest, the best ratio in Jackson County.
Despite that, city leaders have not significantly lowered the tax rate on property owners and they refused to lower it this year despite a booming tax digest and a huge pile of cash sitting in the bank.
Each mill in Jefferson is worth about $520,000. The city could have cut its millage rate 1-mill this year and it would still be in the black because of its padded budget. And if for some reason it wasn’t the in the black, the town has millions of dollars sitting in the bank that it could draw on to supplement its revenues for the short term as the digest grows.

Bottom line is this: Plott is misleading city citizens by claiming the city can’t cut its tax rate because of a bad assessment year and the need to hire more employees. For his part, Quinn is only calling for a symbolic tax cut and isn’t calling for a larger millage rate cut that is clearly justified by the data.
Jefferson should have and could have cut its tax rate this year. The numbers don’t lie.
Mike Buffngton is co-publisher of Mainstreet Newspapers. He can be reached at mike@mainstreetnews.com.

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